Corporations Don’t Pay Taxes – Ever!

A CNN article reports that many corporations don’t pay income taxes, and many more don’t pay the 35 percent corporate tax rate. The average tax is around 18 percent. You and I should be thankful that some corporations don’t pay any taxes and be upset that the average tax rate is 18 percent.

When a corporation pays taxes, it counts those taxes as an expense. All business expenses are passed on to consumers. That means that they are passed on to you and me. When Congress calls for more taxes on Big Oil, they are actually calling for a tax on us. This is in addition to the taxes we already pay to the state where we buy the gas and the federal government.

Governments bring in more money than the oil companies make in profit without taking any risks. Governments just collect the money. Actually, the gasoline stations collect the money, which also costs them, and sends the state and federal governments a fat check.

Governments are in the business of fomenting class warfare. It’s one of the ways they can tax without a groundswell of opposition. There are fewer corporations when compared to individual voters. So by campaigning on a “tax the corporations” platform, politicians can appease and gain the support of tax payers. In the end, however, taxpayers are getting stuck with the higher taxes corporations will pay.

Oil companies are in for major political attacks. Many of the people who argue for higher taxes from Big Oil are invested in mutual funds that are heavily weighted in oil stocks and companies that are dependent on oil companies. Some of the raw materials that are produced from petroleum (“rock oil) are synthetic cloth, plastics, paint, inks, tires, drugs and medicines, cosmetics, and many other products.

Petrochemicals can be changed into a variety of products: plastics, clothes fabrics, paints, laundry detergent, food additives, lawn chemicals, and more than 6,000 other everyday products. The middle vapors result in gasoline, kerosene, and diesel fuel, as well as jet fuel (a form of kerosene). Next come the fractions that make home heating oil and fuel for ships and factories. The heaviest oil produces lubricating oil and grease, which can also be turned into items such as candle wax. At the very bottom of the distillation tower is the leftover sludge, also called bitumen, which is used in the asphalt that makes roads and roofing.

When the oil companies are taxed, the prices of all these commodities go up. So when we want Congress to tax Big Oil or any other company, we are only calling for a tax on ourselves.

Then there are the myths regarding oil company profits. Consider these facts posted on Exxon Mobil’s Perspective Blog : “For every gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That’s not a typo. Two cents.”

Exxon also reported in 2010 that it made less than 8 cents for every dollar of revenue from all their businesses around the world. Compare this gasoline taxes (combined local, state and federal), which range from a low of 26.4 cents per gallon in Alaska to a high of 66.1 cents per gallon in California, averaging 48.1 cents per gallon across all states.

We should also keep in mind that “at the beginning of the twenty-first century, 1.5 million people in the United States were employed in the petroleum industry.” Consider that these big companies pay an equal amount of Social Security and Medicare taxes (more than 7 percent) on each employee. Then there healthcare costs.

If a company ever gets to the point that it can’t pass on the cost of an increase in taxes it either (1) goes overseas where corporate taxes are low, labor is less expensive (because of lower taxes and regulations), and an absence of unions or (2) they go out of business.

How does taxing corporations help you and me? Do we see any of that money flow into our pockets? No we don’t. Politicians use corporations as economic bad guys. The money that’s collected from them is used to fund their pet projects. Democrats and Republicans are guilty.